Karzai's cabal steals the national capital

Chief foreign correspondent

In the company of criminals … the Afghan President, Hamid Karzai. Photo: Reuters

Most American troops you encounter in Afghanistan will tell you two things - the score in last night's ball game and the number of months, weeks and days they have left to serve, before they'll be going home to see the ball game live.

And now that the last exit date for foreign troops is set for the end of 2014, the rank and file and the entire security establishment in coalition countries have their eyes fixed firmly on the exits.

So a thud a few of us heard last week was timely - the delivery of an audit report of unbelievable corruption at the notorious Kabul Bank by the cronies of the much-loved Hamid Karzai; of the Afghan President's efforts to protect those closest to him, as they laughed all the way to the bank; and of his role in punishing the hapless bureaucrats who dared to pursue a near $1 billion racket.

In tiring of the Afghan corruption story, we all walked away from the ordinary Afghans who must pick up the tab. Check any news database for the week just gone and you'll be surprised, or not, to find that only a couple of dozen publications around the world bothered to report on this.

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It's jaw-dropping stuff. The bank was calculatedly run as a $900 million Ponzi scheme - wide-eyed depositors in a country that had never had a bank were always going to be robbed blind, just as soon as sufficient funds had been deposited to kick-start the skimming.

At the behest of authorities in Russia, Interpol had issued an arrest warrant for the bank's founder, but Afghan authorities ignored it. Billions were being spirited out of the country - at times by the suitcase-full, at others in the food-trays on an airline owned by the crooks. Luxury villas were being snatched up for millions of dollars on the Dubai shore, and few bothered to join the dots.

The bank's chief executive, Khalil Ferozi, reportedly bragged that virtually the entire Karzai government was in his pocket. ''Ferozi said to me: 'None of the ministers has the guts to speak against us - they are ours,''' an Afghan political leader told The New York Times.

The bank admitted to donating as much as $4 million to Karzai's re-election campaign in 2009 - despite the President's admission to total campaign spending of perhaps half that amount. And one of Karzai's government colleagues estimates that his total election spending more likely was $25 million to $30 million.

Here's the thing. This was the bank that US and other coalition spruikers championed as the exciting intersection of global commerce and a war-savaged economy. But the report's forensic investigators conclude that its sole purpose was as a vehicle for Karzai's clique to siphon off millions.

More than 92 per cent of the bank's loan portfolio - $861 million or the equivalent of about 5 per cent of Afghanistan's GDP - had been committed to just 19 interconnected people and their companies. Two sets of books were kept - one meticulously crooked; the other an insult to good accountancy, with loans within the clique concealed in the names of friends and domestic servants.

When the Kabul government finally relented, it let off the king cronies - including one of Karzai's brothers and members of other leading political families - without charge if they repaid the loot. Though, while Mahmood Karzai thinks his slate is clean after coughing up $5.3 million, the investigators calculated his full liability at $30-plus million.

Equally troubling is the indictment of a group of financial bureaucrats who head-butted with the government in their efforts to peel back the layers of the scam. The charges against them are seen as a punishment for their thoroughness and bravery in daring to tap the President's friends and hangers-on.

The dismal fate of Fazel Ahmed Faqiryar is especially instructive.

He was fired as Kabul's deputy attorney-general because of his determination to follow the money trail down the corridors of power. And last year his former boss, Attorney-General Mohammed Ishaq Aloko, opened an investigation into what The New York Times reported were allegations that Faqiryar had libelled Karzai's ministers by accusing them of corruption.

''What's the use of talking,'' Faqiryar told the newspaper. ''The moment I decided to fight corruption, I knew I would run into problems. Not only me, but every single patriotic Afghan who has tried to fight corruption has been pressured and, in the worst cases, has been fired and accused of something.

''You can't find a single honest person fighting corruption who is still in his job.''

The Kabul Bank audit by the Kroll investigative company was commissioned by Afghanistan's central bank. And scarily, it is just about a single business in a poorly managed economy, awash with billions in aid dollars and the proceeds of the world's biggest opium crop.

In 2008, the US Vice-President, Joe Biden, reportedly stormed out of a dinner of lamb and rice with Karzai at the Presidential Palace in Kabul, after the Afghan leader repeatedly fobbed off his entreaties to act on corruption. And three years later, it was a chastened Biden who breasted the microphones with Karzai in Kabul. ''Let me say it plainly, Mr President: It is not our intention to govern or to nation-build,'' the American offered.

''Wonderful,'' was the Afghan's neat reply.

In all this there is a salutary lesson for Australian prime ministers who might contemplate pitching in with the next coalition of the whatever. John Howard and those who have followed him through the Lodge will say that the Kabul Bank saga played out in the capital - our boys did good work down in Tarin Kowt.

No. If you join the coalition for the next best thing since sliced bread, there is a duty of care to all whose lives are touched by that coalition, to ensure that they get the best of all they have been promised. Why sign up, why legitimise the enterprise if you don't have the power to change outcomes.

Going along for the ride doesn't cut it, especially at a time in world affairs when we have minted a well-intentioned, new interventionist doctrine called Right to Protect.

The Kabul Bank fiasco, and what it reveals of the rampant corruption of the national and international resources that might have bettered the lives of ordinary Afghans, is as much Canberra's legacy as it is Washington's.